What is the Employer Return in Hong Kong? BIR56A and IR56B Explained

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Compliance with local employment rules is critical whether you have just launched a business in Hong Kong or are planning to do so in the future.

The Inland Revenue Department requires company employers in Hong Kong to file an Employer’s Return (ER) once a year.

In line with this, employers in Hong Kong have to keep payroll records and report salaries paid to employers.

Further details about ER filing are provided in this article, including an overview of the employer’s tax obligations, the annual submission of a data file, and ER e-filing services in Hong Kong.

How to file a Hong Kong Employer’s Return Using BIR56A and IR56B Forms?

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In April of each year, the Hong Kong Inland Revenue Department (IRD) issues employers with an annual Employer’s Return, also known as the BIR56A and Form IR56B.

As per the Inland Revenue Ordinance stipulation, handling and processing the ER is part of a Hong Kong employer’s annual obligation.

What is the Employer Return in Hong Kong?

The Employer’s Return of Remuneration and Pensions, otherwise known as Employer’s Return, is an annual form that details an employee’s salary and other benefits.

An employer of a Hong Kong-registered business must submit this return to the Inland Revenue Department.

How to file a Hong Kong Employer's Return Using BIR56A and IR56B Forms

An employer who runs a business in Hong Kong has to keep payroll records and report each employee’s earnings.

All income should be reported through the BIR56A and IR56B regardless of whether an employee earned the income overseas or in Hong Kong.

The Employer’s Return is an annual form used to help the IRD calculate the employee’s salary tax liability from 1 April to 31 March of each assessment year.

The following information and personal particulars are included in the BIR56A:

  • name and address of the company;
  • name of the officer or person authorized for the ER compilation;
  • the number of completed IR56B forms;
  • whether the forms were submitted as hardcopy, online, or a mix of these two formats

The form IR56B has the following details

  • most of the payroll information, such as earnings from employment;
  • details describing non-cash benefits;
  • employee’s position in the company;
  • any further information and changes to the information provided above

The Inland Revenue Ordinance requires employers to keep the records for a minimum of seven years and to inform the IRD of any changes.

How to Report Remuneration Paid to Employees?

Reporting the remuneration paid to employees requires these annual submission process:

  • BIR56A and IR56B-Employer’s return
  • IR56E-To report new employee information
  • IR56F-To report an employee’s termination or death
  • IR56G-To report employees who left abroad for a certain period or permanently

Typically, the IRD sends the BIR56A and IR56B forms in hard copy. However, employers can submit the filled-up forms through the IRD’s e-Filing Services.

Employers are expected to fill up and submit the firms to the IRD within a month after issuing these forms.

What are the Employer’s Annual Tax Obligations Regarding Employee’s Salaries tax?

As presented earlier, entrepreneurs who operate a registered company in HK have to keep payroll records for their employees.

They will also need to report the employee’s total earnings to the IRD.

Here is information to include in the employees’ payroll data files:

  1. employee’s particulars;
  2. whether the employee works on a full-time or part-time basis;
  3. position, such as company director, company secretary, salesman, or accountant;
  4. amount of remuneration;
  5. non-cash benefits;
  6. amount of Mandatory Provident Fund contribution
  7. employment period
  8. contract of employment and amendments

How to file an Employer’s Return?

If you have not filed any employment records this year, you need to make sure you have gathered the payroll data.

You should update each employee’s personal details as necessary and determine the annual salary for that employee.

What to Take Note When Filing Employer’s Return?

Filing an Employer’s Return either through physical delivery mode or the ER e-Filing Services requires the presentation of the employee’s chargeable income.

A Hong Kong employee’s income chargeable to salaries tax, including but is not limited to the following:

  • salaries and wages, including director’s fees;
  • bonuses, commissions, leave pay, termination payments;
  • allowances and other benefits received in line with the position;
  • any salaries tax paid by the employer;
  • share options and stock awards;

What are the ER e-Filing Services?

The Employer’s Return e-Filing Services, otherwise referred to as ER e-Filing Services, allows employees to submit their ER using two modes:

Online Mode

Under the online mode of submission, employers can fill up and submit BIR56A plus IR56B, IR6036B plus IR56M, and Employer’s Notifications IR56E/IR56F/IR56G online.

Employers can have two options when submitting employee information. The first option is the Direct Keying service of the e-filing services of Employer’s Return services.

The second option is to upload a data file. The advantage of submitting a data file is that it allows the submission of up to 800 sets of IR56B forms.

The Inland Revenue Department allows the submission of Data File Prepared through direct keying for all ERs.

Further, IR56B and IR56F can be submitted via the preparation of the IR56 forms. In addition, the IRD accepts IRD IR56B Software for the annual form IR56B.

After successful uploading of the forms IR56B and IR56F, the system will generate a paper Control List that includes the transaction reference number and QR code.

The authorized signer signs and submits the duly signed control list to the IRD to complete the electronic filing process.

Mixed-mode.

The mixed-mode method was introduced in 2018 and has been adopted by some employers since then.

Typically e-tax/iAM Smart account users can submit IR56 B or Ir56 F data files without logging into an authorized signer.

After successful uploading of the forms IR56B and IR56F, the system will generate a paper Control List that includes the transaction reference number and QR code.

The authorized signer signs and submits the duly signed control list to the IRD to complete the electronic filing process.

Under the mixed-mode, the authorized signer refers to any one of the following:

  • owner of a sole proprietorship entity
  • Precedent partner of a partnership entity
  • Corporation principal officer, corporate director, secretary, manager, investment manager, liquidator
  • Partnership business director
  • Sole proprietorship precedent partner

In submitting the ER or data file prepared, the authorized signer will use an eTax account, iAM Smart+ with a digital signing function, and a recognized personal digital certificate.

Tell me the deadline for submission of IR56B?

Normally, the deadline for submissions is the 1st of April to the 30th of April. And it is extended to 1 June 2022 for the financial year 2021/22 under the pandemic.

Please keep in mind that the deadline is one month from the day your business receives the BIR56A form. Every year on the first working day of April, this occurs, and the form is printed with a date.

If your first working day of April falls on a Friday, your deadline will be May 3rd.

If your firm has no workers, has not ended operations, or has just begun operations during the current assessment year, you must instead complete the BIR56A and IR56B forms and submit them by April 30th.

The BIR56A will be issued to you by the IRD 3 to 6 months after you submit your first audit if you own a newly established business. What should HK employers take note of when filing employer returns?

In preparing an employer’s report, employers must disclose the chargeable income of their employees. The taxable amount on income depends on the number of earnings or salaries that are being paid.

An employee’s salary (chargeable earnings) must be reported on form A56B in the Employers’ Return.

Tell me the annual salary obligation for employers?

It is required that employers complete the forms IR57B – BIR 56A and IR57B at the Hong Kong Income Tax Department.

In 2022 employers’ return forms (BIR 56A) will become available together with IR 56B in the first week of April 2022.

If a company is owned and employed in the Hong Kong area, you must maintain payroll data and report this amount to the Inland Revenue Department.

The employee s earnings, regardless of where the worker worked, must be recorded.

FAQs: Employer’s Return in Hong Kong: BIR56A and IR56B

How do I file an employer’s return? Is there any extension for employers who don’t file on time?

Normally issuing BIR56 A and IR56B to Hong Kong employers occurs from April 1. Employers are expected to fill out BIR56B and IR56C forms by January 1.

Upon request of IRD, HK firms can file BIR56A and IR56B applications.

The applicant must fill out and submit Form IR56B within the deadline specified on the document.

A new Hong Kong company will have the BIR56A form issued about three to six months after filing the first company audit.

Companies can file for an extension with the Inland Revenue Department if it needs more time to fill up and submit the IR56B forms.

Remember to include the employer’s file number and the company’s name when requesting form an extension.

Tell me the employer’s return form?

Unless a firm is owned in Hong Kong that employs staff, it must report its income on forms BIR56B, IR56A & IR56B. IR56A forms are the cover letters for every form IR54B a company should submit.

The numbers in which employees apply to be employed on the forms are proportional to the number of employees that the employee employs. In “BIR56B”, the following information is shown:

All business owner in Hong Kong that employs employees should complete the above form. This information needs to exist within IRS 56B.

To ensure the correct returns for your employer. You will also have to submit a business director report.

How to Submit Data File by Uploading?

Yes, company directors are employed by the company’s employees. Your details and earnings details should appear in return.

I am Employed as a Company Director. Do I Need to File my Own Employer’s Return?

Yes. Company directors are considered employees. It is imperative to include their personal and earning details in the Employer’s Return.

One of my employees is leaving Hong Kong for good; should I still file an Employer’s Return for them?

If one of your employees is leaving Hong Kong for an indefinite period, you may need to do the following:

  • know the expected date of departure;
  • make sure to file duly completed IR56G in two copies or via the e-filing services a month before the expected date of exit;
  • determine and pay out the amounts due to the employee, such as salaries,

What happens if I forget to submit some of my employees’ IR56B forms after completing the submission process via the ER e-filing services?

Employers who forgot to submit their employees’ IR56B and other data files via the ER e-filing services should file a supplementary form.

Using the ER e-filing services, select the ‘supplementary’ form and enter the employee’s details.

How to file an Employer’s Return for different types of employees?

Employers must include the particulars of employees working in Hong Kong in the BIR56A and IR56B.

However, employers may only include the total annual income of employees working abroad if their income is equal to or more than HKD132,000.

You can provide additional information, such as when the employee is assigned to a Beijing office and has only visited Hong Kong in less than sixty days during the assessment year.

Do I need to file the Employer’s Return for my employees or freelancers residing outside Hong Kong?

No. Employers are required to include the particulars of employees working in Hong Kong in the BIR56A and IR56B.

I am the Company Director residing outside Hong Kong and never visited Hong Kong during the financial year. Do I need to report my director’s remuneration received during the year in the Employer’s Return?

Yes. You have to report the director’s remuneration in the Employer’s Return no matter where the director is residing.

Wrap Up

Employers in Hong Kong must file the Employer’s Return. They must submit several forms in the process, which can be time-consuming.

If you need help with filing your Employer’s Return, contact Reachtop KSHK CPA. We are a professional firm that helps business owners with their paperwork so they can focus on what is more important to growing your business.

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